German Finance Minister Wolfgang Schaeuble told German broadcaster ARD, "It will cause a lot of trouble for Switzerland."

The Swiss on Sunday approved cuts to immigration quotas applicable to their fellow Europeans in a measure known as "Stop Mass Immigration." The measure passed with 50.3% of the vote, and its requires employers to make Swiss nationals a priority during the hiring process.

The leaders of the Swiss People's Party (SVP), which led the initiative, said the majority of Switzerland said clearly that immigration has gone too far.

"The Swiss people said clearly, Switzerland is ours," Christoph Blocher, vice president of the party, told Swiss broadcaster SRF.

The SVP argued that the infrastructure of the country was overburdened and the price of housing was going up because of foreigners. Nearly one-quarter of Switzerland's 8 million people are foreigners, according to the government.

Analysts say that includes the 5-10% of the population who are Swiss-born but not granted passports. The cities where most foreigners live - such as Basel, Geneva, Zurich - voted against the initiative.

Switzerland isn't a member of the European Union but it has close ties to the 28-nation bloc. Switzerland allows most of the EU's 500 million citizens to live and work in the country and Swiss citizens can do the same in the European Union nations.

Because of the referendum approval, the Swiss government will have to renegotiate its treaty with the EU though the measure was not specific on what kind of limits must be imposed on immigration.

Two years ago Switzerland introduced quotas for immigrants from eight central and eastern European nations.

The consequences of the vote "will occupy us for years," Res Strehle, editor in chief of Zurich newspaper Tages Anzeiger told the Local.ch, a Swiss news site.

"More serious than the unclear future relationship with the EU is the sign of xenophobia which Switzerland has sent out to the world," Strehle said.

The European Union is Switzerland's biggest trading partner and a large supplier of its labor.

Swiss business groups such as the Swiss Bankers Association warned that restricting immigration would hurt the economy. Switzerland's export-oriented economy not only needs open borders for trade but also to supply the labor needs of its large companies, they added.

"That really shows that there was shortage of this kind of workers. The fact that we were able to obtain these workers from the EU was a very important factor to sustain our economic situation," said Yves Flueckiger, professor of labor economics at the University of Geneva.

"We very much need foreign workers and it will be very difficult to reach the current economic situation without the foreign population," Flueckiger said.

In the last 10 years, immigration in Switzerland has mainly been made of highly qualified workers, he said.

Switzerland exports technology, watches, chocolate, pharmaceuticals, cheese and weaponry, and is a major player in international banking. EU critics of the referendum said Switzerland could not function without outside help.

"The four fundamental freedoms â?? free movement of people, goods, capital and services â?? are not separable," EU commissioner Viviane Reding told the Financial Times newspaper in London. "The single market is not a Swiss cheese. You cannot have a single market with holes in it."

Fabius said the Swiss may invite retaliation over the move.

"It's bad news both for Europe and for the Swiss â?? Switzerland will be penalized if it moves further away from (Europe)," Fabius said.